Louis Dreyfus Commodities followed rivals Bunge and Glencore in investing in Black Sea port assets, agreeing a joint venture in Odessa to exploit "substantial growth" forecast for Ukrainian grains production.
Louis Dreyfus Commodities - one of the ABCD of major farm commodities groups, with Archer Daniels Midland, Bunge and Cargill - said that it was setting up a joint venture with Brooklyn Kiev, a Ukrainian port services group, "for the development and management" of a terminal at Odessa.
The tie-up is expected to start operating in 2013, and will have storage capacity for 240,000 tonnes of grains when it is finished around August next year.
It aligns Louis Dreyfus Commodities with the likes of Bunge, which already boasts Black Sea port facilities, and Glencore, which a year ago, through a tie-up with Ukraine-based Kernel Holding, paid $265m for a grain export terminal at the deep sea port of Taman.
'Efficient export channels'
Jean-Marc Foucher, the chief executive of Louis Dreyfus Commodities' European and Black Sea division, said the deal was a "key step" in the group's investment strategy for the region.
"The substantial growth in Ukrainian grain production and exports, which is expected to continue in the coming years, driven by higher yields, increasing corn crops and more efficient farming operations, requires efficient export channels."
The Odessa terminal "will be able to handle large volumes of grain and oilseeds quickly and effectively", Mr Foucher said.
Ukraine is a significant exporter of competitively-priced wheat, is the world's biggest source of sunflower meal and oil, and is a growing force in corn shipments too, rising to third rank in global trade behind the US and Brazil.
The group has until now relied on a "variety of commercial agreements" for Black Sea port access.
However, Ciro Echesortu earlier this month, in one of his first statements as the Louis Dreyfus Commodities chief executive, highlighted the importance of "vertical integration" in the company's strategy.
"Commanding the whole distribution chain is pivotal," Mr Echesortu said, as the group unveiled a 13% fall to $258m in underlying earnings for the first six months of the year.
Logistics in the former Soviet Union have, like those in other growing commodity economies, struggled to crop with bumper crops, rendering vulnerable exporters without their own port facilities.